BoE hikes rates 0.25%, now 1%

The UK central Bank, the Bank of England (BoE), has moved to raise interest rates by another 0.25%, bringing the key rate to 1% today, a move largely anticipated by markets. Details of the BoE`s meeting revealed that 3 members of the board of 9 would have preferred to raise rates by 0.5%, which was more hawkish than expected. The BoE`s inflation expectations have also risen to 10% by the end of the year for the UK and additionally they now expect the economy to contract going into 2023 due, in part, to high commodity prices. In reaction to the BoE`s rate decision, sterling has fallen, underscoring the worsening of the central bank`s outlook as currency usually strengthens when rates are lifted. UK sovereign debt was also being bought as recessionary fears increased and risk off assets looked more attractive.